When a Firm Has the Opportunity to Add a Project

question 35

Multiple Choice

When a firm has the opportunity to add a project that will utilize excess factory capacity (that is currently not being used) , which costs should be used to help determine if the added project should be undertaken?

• A)Allocated overhead costs
• B)Sunk costs
• C)Incremental costs
• D)Average costs

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Definitions:

Psychological Contract

An unwritten agreement that sets out mutual expectations, rights, and duties between parties, typically between an employer and employee.

Person-Environment Fit

The degree to which individual and environmental characteristics match.

Enterprising

Showing initiative and willingness to undertake new projects.

Human Factors Psychology

The study of how people interact with products, systems, and environments in order to improve technology, safety, and usability.